Nasdaq is advancing efforts to introduce tokenized securities trading on major US exchanges, a move that, if approved, would mark the first integration of blockchain technology into the core of America's national market system and could potentially reshape how securities are traded and settled.

On Monday, Nasdaq submitted a rule amendment proposal to the Securities and Exchange Commission (SEC), seeking to allow listed stocks and exchange-traded products (ETPs) on its mainstream markets to trade in "traditional digital or tokenized form." This represents the most significant attempt by an exchange operator to introduce blockchain-based settlement into the national market system to date.

This initiative follows closely on the heels of the SEC's recently released rule-making agenda, which indicates the regulator is considering amendments to allow crypto asset trading on national securities exchanges and alternative trading systems (ATS). Against the backdrop of a more relaxed regulatory stance toward cryptocurrencies under the Trump administration, Nasdaq's proposal is viewed as a pivotal step for mainstream Wall Street financial institutions to strengthen their positioning in the asset tokenization wave.

If the proposal is approved, it would mark the first time tokenized securities receive authorization for trading on a major US securities exchange. This development reflects the growing institutional investor demand for tokenized assets, with industry supporters believing tokenization could significantly enhance liquidity and efficiency within the financial system.

**Nasdaq's Proposal: Embedding Tokenization Technology into Existing Market Framework**

Nasdaq emphasized in its proposal that the plan aims to integrate tokenization technology into existing market frameworks rather than disrupt them. The exchange stated in its filing:

"We believe markets can harness the benefits of tokenization while continuing to provide the benefits and protections of the national market system."

The company argued that "a complete exemption from the national market system and related protections is neither necessary nor in investors' best interests to achieve tokenization goals."

The proposal aligns with previous statements by SEC Commissioner Hester Peirce that tokenized securities cannot circumvent existing securities laws. Nasdaq indicated its plan is constructed within this legal framework.

To ensure investor protection, Nasdaq plans to set high standards for tokenized securities, requiring them to have "the same substantive rights and privileges as equivalent traditional securities." If these conditions are met, tokenized securities would trade "on the same order book and under the same execution priority rules" as traditional securities. Nasdaq explicitly stated that if tokenized instruments lack equivalent rights, they would be treated as different instruments.

**Regulatory Easing Paves the Way**

Under Nasdaq's vision, if the proposal is approved and central clearing counterparty infrastructure is in place, investors could purchase stocks on Nasdaq and complete settlement in token form, without changing order routing, pricing, monitoring, or reporting methods.

Nasdaq anticipates that, assuming the Depository Trust Company's infrastructure is ready, US investors could potentially see the first token-settled securities trades as early as the end of the third quarter of 2026.

Nasdaq's proposal comes at a delicate moment as the US regulatory environment undergoes changes. Under new Chairman Paul Atkins, the SEC is attempting to adjust cryptocurrency-related regulations, reducing rules that Wall Street has long criticized as "overly burdensome."

Just days before Nasdaq submitted its proposal, the SEC published its agenda, which included potential rule amendments to facilitate crypto asset trading on national exchanges. If implemented, these policies would represent a major victory for the digital asset industry, which has long called for more adaptive rules, helping further integrate crypto assets with traditional finance.

RedStone co-founder Marcin Kazmierczak expressed confidence that conditions for large-scale tokenization implementation are now mature, largely due to a more favorable regulatory environment, blockchain technology advances, and growing institutional investor interest in tokenization projects.

**Opportunities and Challenges Coexist**

Asset tokenization typically refers to the process of converting financial assets such as stocks, bonds, funds, and even real estate into crypto assets. Nasdaq President Tal Cohen stated on his LinkedIn profile that combining tokenization with traditional markets presents "extraordinary opportunities to accelerate trade settlement, automate processes, and improve efficiency."

However, not everyone shares this optimism. The World Economic Forum noted in a May report that insufficient secondary market liquidity and lack of clear global standards are two major challenges hindering tokenization adoption. The World Federation of Exchanges has also expressed concerns and called on regulators to temper the rush toward tokenization.

Critics warn that without strict regulation, tokenization could introduce new systemic risks. Several major global banks, including Bank of America and Citigroup, have indicated they may explore launching tokenized assets, including stablecoins.